Brent above $113 ahead of US jobs data

Singapore, September 7, 2012

Brent futures steadied above $113 a barrel on Friday ahead of a US jobs report that will gauge the economic health of the world's biggest oil consumer as it considers a release of emergency oil reserves, potentially much larger than the last.

Investors are focused on U.S. nonfarm payrolls data, expected to show an increase of 125,000 jobs, strengthening the case for a third round of monetary easing by the Federal Reserve, which could kick-start its economy and oil demand.

Brent crude futures rose 13 cents to $113.61 per barrel by 0706 GMT, off a session low of $112.61. U.S. crude fell 7 cents to $95.46.

"A lot of people were waiting for yesterday's ECB meeting and are still waiting for the results of U.S. employment data, which are the two biggest events in the last month," said Ken Hasegawa, a commodity sales manager at Newedge Japan.

"It's possible that once the market picks up after the U.S. data is published, it will go down on profit-taking, as was happening today."

Data on Thursday showed U.S. private employers added a stronger-than-expected 201,000 jobs in August and new claims for jobless benefits fell last week to the lowest level in a month, upbeat signals for a struggling labour market.

Oil prices had risen the previous day after the European Central Bank unveiled a new and potentially unlimited bond-buying programme to stem the euro zone debt crisis, but later declined as traders bet that market fundamentals could not justify higher prices.

Obama administration officials met a handful of oil market experts on Thursday as the White House considers the merits of another release of emergency oil reserves - potentially much larger than the last.

Government officials did not reveal any plans to tap the Strategic Petroleum Reserve (SPR), but voiced concern about tightening U.S. fuel supply and sounded out experts on how energy prices could behave in coming months, sources said.

Hasegawa expected Brent crude to stay within a range of $107 to $117 per barrel, with U.S. crude to stay in the $90 to $100 range.

"Oil prices might be supported by a lot of measures to improve the situation in Europe, but the upside is limited, as many countries do not want oil prices to spike," Hasegawa added.

U.S. crude oil stockpiles fell more sharply than forecast last week as Hurricane Isaac hit the U.S. Gulf region and temporarily shut down production platforms, refineries and ports, government data showed on Thursday.

Domestic stocks of crude, excluding oil held in the Strategic Petroleum Reserve, fell 7.43 million barrels to 357.1 million in the week ended Aug. 31, the Energy Information Administration reported. Analysts in a Reuters poll had forecast a drop of 5.3 million.

Energy production restarts continued in the Gulf of Mexico after Hurricane Isaac.

Upward risks for oil prices persisted after a U.S. congressman confirmed a high-level spat between the United States and Israel over Iran's nuclear program.

Israeli Prime Minister Benjamin Netanyahu blew up at the U.S. ambassador last month because he was "at wit's end" over what he saw as the Obama administration's lack of clarity on Iran's nuclear programme, House Intelligence Committee Chairman Mike Rogers, a Republican, said on Tuesday.

Iran says its nuclear programme is for peaceful energy purposes.

Israel is facing growing international pressure not to unilaterally attack Iran's nuclear infrastructure and the United States has made clear it opposes any such strike. – Reuters